LHA rates to be frozen at 2024 values

Local Housing Allowance (LHA) rates, which determine the housing element of Universal Credit and Housing Benefit for private renters, are to be frozen at 2024 values from April 2025, according to announced policy¹. The freeze follows a re-linking of LHA to the 30th percentile of local rents in April 2024, which was subsequently re-frozen by the previous Government¹. The Joseph Rowntree Foundation (JRF) describes the 2025 freeze as "announced policy"¹, and the National Institute of Economic and Social Research (NIESR) states that LHA rates "are frozen again from April 2025"².

LHA was introduced in 2008, when rates were set at the median (50th percentile) of local rents¹. In 2011, rates were reduced to the 30th percentile¹. Since then, the allowance has been frozen in cash terms for seven of the last 14 years, capped at CPI or 1 per cent in some other years, and reset to the 30th percentile in 2020 before being frozen again from 2021 to 2023¹. The UK is divided into 200 Broad Rental Market Areas for the purpose of setting rates¹.

JRF research, conducted by Manchester Metropolitan University, estimates that the changes to LHA between 2011 and 2025 have left private renters £684 per year on average worse off, with a total cost to private renters of around £1 billion¹. The shortfall rises to £887 per year for a working-age couple with children and £957 per year where the adults in the household are Black¹. JRF also estimates that 60,000 more private renters are in after-housing costs poverty than would have been the case without the changes¹.

If LHA remains frozen, JRF estimates that private renters in receipt of housing benefits will be £243 per year worse off in 2025/26, rising to £703 per year by 2029¹. For a working-age couple with children, the figures are £340 in 2025/26 and £882 by 2029¹.

Source: JRF, Table 1, average annual effect on income for private renting recipients of housing benefits or UC if LHA is kept frozen, 2025 to 2029¹.

NIESR notes that LHA rates are calculated using a survey of tenancies in each local area, but that it is not mandatory for landlords to provide this information, which it says leads to a risk that rates are not representative of actual local rental costs². NIESR recommends setting LHA rates to average local rents, which it estimates would cost £2.1 billion in 2025/26 and reduce child poverty by approximately 70,000².

Why it matters for households

Around half (52 per cent) of all people in private renting households that receive housing benefits are in after-housing costs poverty, compared with 21 per cent of everyone in the UK, according to Department for Work and Pensions figures cited by JRF¹. A quarter of private renters receiving housing benefits are in poverty only because of their housing costs¹. JRF's cost of living survey found that 81 per cent of low-income private renting households in receipt of housing benefits are going without essentials such as food, heating and warm clothing, and 59 per cent are in arrears with at least one household bill¹.

The freeze means that the maximum amount of housing support for private renters on Universal Credit or Housing Benefit will not rise in cash terms from April 2025, even where local rents increase. JRF estimates that 20,000 more private renters will be pulled into poverty in 2025/26 if LHA remains frozen, including 10,000 children, with 40,000 more in deep poverty and a further 10,000 in very deep poverty¹. By 2029, it estimates 50,000 more private renters would be in poverty, including 30,000 children¹.

Separately, NIESR notes that the standard allowance for Universal Credit in 2024/25 was £393.45 a month for a single person aged 25 or over, rising to £400.14 in April 2025, and £617.60 for a couple aged 25 or over, rising to £628.10 in April 2025². It states that the 2025 Spring Statement signals a rise of 1.7 per cent in the UC standard rate, worth £6.69 a month for a single person over 25, alongside announced cuts to health-related benefits which it says are projected to push a further 250,000 people, including 50,000 children, into poverty².

What happens next

JRF states that unless the Government explicitly chooses to unfreeze LHA and re-link it to local rents, it will remain frozen in cash terms for 2025 and beyond, because that was the policy of the previous Government¹. It adds that the Office for Budget Responsibility's 2023 forecasts presume LHA will be frozen over the forecast period¹. No date has been reported for a decision on future uprating. More detail on the benefits system is available in our benefits guide.